Stocks ex­tend gains on bullish statis­tics

China Daily (Hong Kong) - - BUSINESS - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

China’s stocks rose for a fifth day on Mon­day, the long­est stretch of gains in two months, af­ter the re­lease of bullish data for the non- man­u­fac­tur­ing sec­tor. Con­sumer, health­care and tech­nol­ogy com­pa­nies led the gains, while do­mes­tic dairy com­pa­nies ad­vanced on hopes of in­creas­ing de­mand af­ter China banned milk pow­der im­ports from New Zealand be­cause of a con­tam­i­na­tion scare in­volv­ing Fon­terra Co­op­er­a­tive Group Ltd.

Ship­build­ing in­dus­try com­pa­nies also rose af­ter the govern­ment re­leased a cir­cu­lar draft­ing a de­vel­op­ment plan for the in­dus­try.

Shang­hai Friend­ship Group Inc led the rally for retailers with gains of more than 4 per­cent, while dairy pro­ducer In­ner Mon­go­lia Yili In­dus­trial Group Co rose 3.1 per­cent.

The CSI300 in­dex of lead­ing Shang­hai and Shen­zhen A-share com­pa­nies rose 1.38 per­cent, clos­ing at 2,278.3 points, the high­est level since July 17.

The Shang­hai Com­pos­ite In­dex rose 1.04 per­cent, the high­est since July 16.

Re­cent data showed that the econ­omy is show­ing signs of sta­bi­liza­tion in the non-man­u­fac­tur­ing sec­tor and in­di­cated stronger do­mes­tic de­mand, an­a­lysts said. Th­ese helped boost mar­ket sen­ti­ment.

The Pur­chas­ing Man­agers’ In­dex for the non-man­u­fac­tur­ing sec­tor re­bounded af­ter fall­ing for three con­sec­u­tive months, ac­cord­ing to of­fi­cial data re­leased on Aug 3.

The non- man­u­fac­tur­ing PMI was at 54.1 in July, up from 53.9 in June, ac­cord­ing to the National Bureau of Statis­tics and the China Fed­er­a­tion of Lo­gis­tics and Pur­chas­ing.

As in­dus­trial pro­duc­tion is de­cel­er­at­ing, the non-man­u­fac­tur­ing sec­tor may be­come a new driver for China’s eco­nomic growth, an­a­lysts said.

“Pro­duc­tion has been ham­pered by a lack of stim­u­lus and weak ex­port de­mand. Slower res­i­den­tial in­vest­ment has weak­ened de­mand for steel, ce­ment, glass and other in­dus­trial goods,” said Alais­tair Chan, an econ­o­mist with Moody’s An­a­lyt­ics.

In con­trast with the dis­ap­point­ing per­for­mance of the in­dus­trial sec­tor, the de­vel­op­ment of the ser­vice sec­tor has been the bright spot this year, ac­cord­ing to Jian Chang, an an­a­lyst with Bar­clays Re­search.

The ser­vice in­dus­try saw its added value grow 8.3 per­cent year-on-year in the first half, faster than GDP growth, while fixed-as­set in­vest­ment in the ser­vice sec­tor is up 23.5 per­cent year- to- date, out­pac­ing the 15.6 per­cent growth in the man­u­fac­tur­ing sec­tor, ac­cord­ing to a re­cent re­port by Bar­clays Re­search.

“We ex­pect the ex­pan­sion of the pilot value- added tax re­form na­tion­wide to more in­dus­tries in Au­gust to fur­ther spur ser­vices de­vel­op­ment. The re­form will re­place the busi­ness tax with value-added tax for many ser­vice in­dus­tries, in­clud­ing trans­port,” the Bar­clays re­port said.

XIE ZHENGYI / FOR CHINA DAILY

Shares rose again on Mon­day on re­ports that the govern­ment is in­creas­ing in­vest­ment in in­fra­struc­ture con­struc­tion. The Shang­hai Com­pos­ite In­dex gained 1.04 per­cent.

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